Mr. McDonald’s

If last year’s market entry of Starbucks can be viewed as a prototype, then by the time you read this piece there will have been extraordinary queues outside McDonald’s. Using the Drive-Thru model to enter the Vietnamese market, images of motorbike logjams trailing back down Saigon’s Dien Bien Phu come to mind.

The arrival of this fast food monolith, this symbol of American culture, has been a long time in the making. For many, too long.

Says Henry Nguyen, the man charged with bringing McDonald’s to Vietnam, “A lot of my friends here and a lot of young people I meet, ask me, ‘Why hasn’t McDonald’s come earlier, doesn’t McDonald’s think Vietnam is a promising market?’ There is a lot of economic self-esteem embedded in the presence of McDonald’s.”

From Immigrant to Importer

Brought up as an immigrant kid in the US — Henry was born in Vietnam in 1973 — for the Classics graduate turned Chicago medical doctor, McDonald’s represented “Americaness, wanting to fit in and wanting to feel like an American kid”.

“It was a big part of that identity,” he explains, “of feeling like I was part of the new country that I was in… There is a lot of culture embedded in food, but there is nothing more American than hamburger, fries and apple pie.”

Yet when he arrived in Vietnam after the millenium, the only American fast food chain in the country was KFC. It was when KFC first made the transition from Ho Chi Minh City to Hanoi in 2003, where he was based at the time, that he had the idea of bringing in McDonald’s.

“Don’t get me wrong, I love Vietnamese food, but I just missed western food,” he says. “Having KFC come out was nice, but the next question that popped into my head was ‘Why isn’t McDonald’s here?’”

That question led to him contacting the fast-food chain via their website, filling in a franchise application form and sending it back. In return he received the generic thank you letter for submitting his application, but nothing more. As it turned out, at the time McDonald’s was no longer expanding overseas — their arrival in Vietnam this year is the first new market they have entered into in 15 years.

On his next trip back to Chicago, Henry tried to make further contact. As a graduate of Kellogg University, he made his connection via a fellow Kellogg alumnus now working at McDonald’s University. The person he eventually met with was called Jim Kramer.

“He was very gracious to me,” recalls Henry. “We kind of hit it off over sports and historical biographies. Over the years I just told him I would be here and be in contact with him until McDonald’s was ready, because his message to me was that although Vietnam was top of the list for expansion, at the time internally and corporate-wise it wasn’t part of McDonald’s strategy to open in new markets.

“So I said, ‘Whenever you are ready, I will still be there.’ It was only in recent years with the arrival of CEO Don Thompson that it was decided McDonald’s was ready to get bigger and better… 10 years later it has happened.’”

1,200 Sandwiches an Hour

Arriving in 2014 has its benefits. The likes of Lotteria, Jollibee, Carl’s Junior and Burger King have already made it to Vietnam. Henry, though, feels that the “uniqueness of the McDonald’s system” will help them be “clearly differentiated from all the other brands”.

Henry has already had experience in the fast-food market — he was involved in bringing in Pizza Hut, Subway and Coffee Bean & Tea Leaf.

The first store is set up on the edge of Ho Chi Minh City’s District 1 and Binh Thanh areas, with a production line that can churn out 1,200 sandwiches an hour. Although for now most products are imported — the fries are coming from the US — Henry is hoping to eventually source more ingredients locally.

As with the other stores there are private areas to hold functions, disabled toilets and disabled parking, the standard arches perched tower-like above and a McCafé eventually to be part of the setup. Targeting every kind of customer from “teenagers to young professionals”, the chain will also aim to get involved in community projects in the same way it does overseas.

The Detractors

One comment about McDonald’s and indeed most other fast food restaurant chains has been the nutrition factor. Addressing obesity concerns, McDonald’s will be clear about the nutrition and calorie counts of their products, as they’ve been in other markets.

“It will be online on our website,” says Henry. “[Customers] will be able to access it on our packaging, on the tray liners… We want to be very transparent about what’s in our food, where it is sourced from, the nutrition levels.”

While this won’t satisfy all of the naysayers — those who vehemently oppose the entry of this fast food monolith into Vietnam, those who see McDonald’s as representing everything negative about American consumerism — it will certainly go some way towards pushing the onus of eating healthily and responsibly onto the customer.

Says Henry, “Personally I wholeheartedly disagree [that McDonald’s represents everything that is negative about America]. It represents a childhood of fun and joy, of good times and maybe [these detractors’] experience is different.

“But McDonald’s serves 70 million people per day. If [they] were truly not a good actor and were doing something bad, then everybody would know it. You can’t hide it. We live in a very transparent world today.”

A Larger Meaning

One thing’s for sure. Having McDonald’s in Vietnam means the country will now be part of the Big Mac Index. Invented by The Economist in 1986 as a guide to purchasing-power parity in different nations around the world, the Big Mac Index was created as a tool to make exchange-rate theory more digestible. It allows analysts to get an understanding of local production and delivery cost, the cost of advertising (considerable in some areas), and most importantly, what the local market will bear.

For investors, says Henry, this is often a key measurement when it comes to making investment decisions. “It is a consumer pricing index,” he explains. “There is a lot embedded in the cost of a Big Mac. By having Vietnam on that list, it makes it part of a bigger global economy.”

Both emotionally and economically, for the Vietnam of 2014 that is vital.